EA-6B Prowler from the Salty Dogs of Air Test and Evaluation Squadron 23 flies September 16, 2011 over Southern Maryland. The plane uses a biofuel blend of JP-5 aviation fuel and camelina oil.

Growing demand in huge emerging economies like China and India will drive up world oil prices no matter what the US does, so it’s crucial for the US to develop energy alternatives that will keep it from being hurt by those nations’ successes, says Adm. (Ret.) Dennis Blair, former director of national intelligence.

Blair is part of the Energy Security Leadership Council (ESLC), a panel of military and private sector leaders that recently held a Washington, DC roundtable to release its own “National Strategy for Energy Security.”

The leaders say the US needs to pursue an energy policy that’s thought out in the context of national security.

While that means increased domestic energy production, it also means less use of oil, ESLC members said.

“Canada and Norway are oil exporters, but they pay the same gas price” the US does because prices are determined by the world market, said Fred Smith, CEO of FedEx and ESLC Co-Chairman with retired Marine Commandant Gen. P.X. Kelley, stressing more domestic production alone is not the answer. “We have to recognize the need to diversify away from petroleum.”

Smith and Eric Schwartz, Chairman of Securing America’s Future Energy (SAFE), a co-founder of the ESLC, said that conclusion is driven by a simple fact: the world market in oil is not a free market.

“The marginal barrel of oil is controlled by OPEC,” the Organization of the Petroleum Exporting Countries, said Smith, adding OPEC nations have 80% of known oil reserves.

We have to recognize the need to diversify away from petroleum.”

The panel said in its report that the US needs to increase federal investment in energy research and development “to help catalyze those innovations most likely to improve energy security.”

Better batteries, biofuels and infrastructure for natural gas fueling were all on that list.

Speakers agreed a federal role is crucial.

Sen. Lamar Alexander (R-TN) told the roundtable he would like to see the current federal energy R&D budget doubled. The right policies can strengthen the economy, he said, adding he’d like to see more research in areas like a 500-mile car battery and converting carbon dioxide from coal plant emissions to a fuel.

David Steiner, CEO of Waste Management, said his firm produces eight times as much energy from waste as solar power does nationally, and is investing in energy development. Steiner said there’s a lot of promising technology; the issue for business is whether the technology can scale up out of the laboratory, and that’s often a $100 million bet.

Gene Sperling, Director of the National Economic Council, said funding of breakthrough technologies sometimes must be done by the federal government because the private sector simply can’t. R&D funding is investment in the future and “we can’t keep cutting that,” he said.